Image courtesy of Flickr, Raymond Bryson
When deciding which mortgage lender to get a loan with, choose those who are accurate, efficient, timely and who provides excellent customer service.
Shopping is ingrained in the American culture. For many people shopping is a great way to pass the time, but when it comes to shopping for mortgage loans it can be much less enjoyable. Millions of people dread having to go to a lender or broker to shop for their loan because quite simply, it's not something people do often.
In our previous article, What is APR, we cover how to shop and compare lenders and brokers by reviewing the interest rate and closing costs quoted to you; but here we will talk about those intangible qualities that can literally make or break a deal.
There are many important attributes to look for when determining which lender to choose.
Big national or global name brands are not necessarily better than smaller operations who are local to your city or state. In our experience working with tens of thousands of borrowers, we have identified the following as key qualities you should care about.
Look for a lender who delivers on what they promise. However, be cautious of a lender who promises too much too quickly. Work with a lender who asks all the right questions at the right time, and who can give you a clear picture of your rate, costs and fees (found on the Good Faith Estimate and Truth in Lending Disclosures).
Initially, your first contact with a lender or broker will likely be a salesperson or loan officer. Their job is to gather basic information about you and then search for loans which you may qualify for. Therefore, at this stage you cannot expect that the estimate they provide you will be definitive.
While you may want to hear interest rates and loan terms immediately, just understand that until a loan officer gathers your entire loan application, credit report and documentation, those terms are not accurate.
What you're looking for is an organized lender who knows what they're asking for and when to ask for it. Getting approved is a routine process for any lender, and their process should be organized, simple and clear.
For example, in getting pre-approved, once you allow a lender to review your application and credit report, they are required by law to send you a Good Faith Estimate, Truth in Lending Disclosures and Mortgage Servicing Disclosures within 3 business days.
Take note of your communication with the lender and how quickly they return your calls and e-mails. If there are gaps in communication or delays in receiving important documents then you know you may be dealing with more efficiency issues going forward.
Is the loan going to close on time? It may be difficult to answer this question when you first talk to a lender, but there are telltale signs. Were they late in responding to you? Did they get back to you as promised? Do they follow up or update you regularly? If they're dropping the ball on routine stuff, watch out!
The mortgage loan process is time sensitive and you the borrower have an important role to play too. Be sure to provide requested documentation as soon as possible. Delays from one party may affect another party and slow the entire loan process as a result.
Look for lenders who take the time to answer your questions and are more concerned about making sure you understand the process and the loan you're getting, rather than just getting you committed to a loan.
Your mortgage professional should make it as a personal responsibility to educate you about the loan process. Lenders who spend the extra time to make sure all your questions are addressed is a good indicator of someone who truly cares about the level of service they provide.
Remember, you're committing to borrow potentially hundreds of thousands of dollars over a long loan term. Be sure to choose a lender who respects and understands the financial commitment you are embarking upon.
A direct lender lends their money directly. They literally "cut a check" for your property.
Direct lenders are typically banks, credit unions and thrifts who hold your money, such as Wells Fargo, Chase or Navy Federal CU. However, there are also non-bank lenders, a.k.a. "mortgage bankers" who specialize in giving out mortgage loans only.
|Expect clear choices, competitive pricing and an approval process with less friction.||You'll want to shop multiple lenders since each are restricted to only the loans they have and interest rates available within their own lending standards.|
A broker will shop you between several lenders. They're essentially loan officers for many different lenders. They'll tell you what each lender is offering and help you close the loan. The broker will run your credit only one time and compare it with several different lenders, whereas as a customer, you would have to run credit with each lender if you were to shop around on your own.
Brokers don't lend their own money or make the final loan decision; they collect your information and create a loan package. The loan packages are submitted to the underwriting departments of several lenders who make the final decision on your loan.
|You'll get a professional who has relationships with many different lenders and as a result, more loan options to meet any specific needs or time frames you have.||Since brokers will shop your loan to many different lenders, be sure to ask which lenders were contacted and what those results were.|
Online portals such as Lending Tree, Zillow and Bank Rate are advertising channels for direct lenders and brokers.
These online portals do not lend or help facilitate the loan process. However, they do provide access to a large selection of lenders and brokers. They make it easier to "window shop" and get a feel for what lenders have to offer and who they are before you decide on which lender to choose. Take note that the information you receive from these sources are only estimates based on best case assumptions.
|Easily rate shop online anytime from a large selection of lenders and brokers. Borrower reviews also are very helpful to filter through the many choices.||Since these are advertising portals, be careful giving out your personal information as it will be sold to a lender, or in many cases, multiple lenders.|
Whether you decide to use a direct lender or broker, it's important to remember that the size of the lender and brand name doesn't necessarily mean they'll be any better than a smaller company. The real difference between any lender is the people you work with. It's more important to make sure the people you work with are competent and easy to communicate with.
As you shop and make a decision take into account their accuracy, efficiency, timeliness and customer service levels.
See what BESMARTEE’S SMART MORTGAGE can do for you.
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